Final answer:
To calculate the yield-to-maturity (YTM) of a bond, you can use the present value formula. In this case, the bond has a par value of $1,000, a coupon rate of 8.12%, interest paid semi-annually, and 19 years to maturity. First, calculate the present value of the bond's future cash flows. This includes the coupon payments and the final principal value. Then, find the interest rate that makes the present value equal to the bond's current price of $943. The resulting interest rate is the yield-to-maturity (YTM) of the bond. Using a financial calculator or spreadsheet software, the YTM of the bond is approximately 4.76%.
Step-by-step explanation:
To calculate the yield-to-maturity (YTM) of a bond, you can use the present value formula. In this case, the bond has a par value of $1,000, a coupon rate of 8.12%, interest paid semi-annually, and 19 years to maturity.
First, calculate the present value of the bond's future cash flows. This includes the coupon payments and the final principal value. Then, find the interest rate that makes the present value equal to the bond's current price of $943. The resulting interest rate is the yield-to-maturity (YTM) of the bond.
Using a financial calculator or spreadsheet software, the YTM of the bond is approximately 4.76%.